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Stocks Steady After Streak of Declines

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November 03, 2016

By Riva Gold and Daniel Huang

Stocks steadied Thursday after several sessions of declines.

Tightening polls in the U.S. presidential election have weighed on sentiment all week, pushing major indexes into the red. But shares got a boost after a U.K. court ruled that the British government would need Parliament to vote on Brexit before it could officially start the separation process from the European Union.

In afternoon trading, U.S. stocks were little changed. The Dow Jones Industrial Average fell 5.5 points, or less than 0.1%, to 17954.The S&P 500 fell 0.3% after posting seven back-to-back declines, the most since 2011. The Nasdaq Composite fell 0.7%.

The British pound had one of the bigger moves of the day, rising against the dollar to around its highest level in a month. The pound was recently up 1.2% at $1.2453.

"The pound thinks it means either a 'softer' Brexit or it increases the probability that we don't actually leave the EU, but I think that's probably wishful thinking," said Alan Clarke, head of European fixed-income strategy at Scotiabank.

Sterling also got a bump after the Bank of England left its interest rates unchanged as widely expected and played down the chances of a further rate cut, while raising its inflation forecasts. London's FTSE 100 index, which tends to move inversely to the pound, fell 0.8%.

Investors pulled back slightly from government bonds. The yield on the 10-year U.S. Treasury note rose to 1.817% from 1.799% Wednesday,according to Tradeweb. Gold fell 0.4% after two sessions of gains, when uncertainty over next week's U.S. election stoked demand for havens.

"What's going on with politics is at the forefront of investors' minds," said William Hamlyn, investment analyst at Manulife Asset Management. "Markets don't like uncertainty, and that's driving things at the moment, " he said.

The CBOE Volatility Index, which measures investors' expectations for stock swings, moved higher for seven sessions through Wednesday and was up again Thursday.

The election has "masked all the good things like earnings and economic data," said Jamie Cox, managing director at Harris Financial Group.

Investors appeared unmoved by the Federal Reserve's announcement a day earlier that it was leaving interest rates unchanged and signaled it was likely raising rates in December. "It was kind of neat that the Fed meeting wasn't the number one talked about item of the day," said Mr. Cox.

Whole Foods shares rose 0.3% after the high-end grocer reported quarterly profit and said it was eliminating its dual-chief executive leadership structure.

Facebook shares slid 5.8% despite surging profits after the social-media company warned of a slowdown in advertising growth.